Adidas plans to extend its product line from the ground up

Takeaway: Adidas, a company well-known for shoe production, is going to enter Europe’s growing outdoor apparel market.

Market attractiveness certainly exists in this category, as outdoor gear has been outperforming other sporting goods categories.

The bigger question, however, relates to Adidas’ competitiveness in this market.

With a huge player in North Face and niche competitors, such as Patagonia, does Adidas stand a chance?

Most likely this will come down to Adidas’ brand equity in the eye of the consumer. Does Adidas stand for all outdoor activity? Or is it stuck, like a double-knotted tie, to the shoe industry?

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Excerpted from BusinessWeek, “Adidas Leaps from Hot Sneakers to Warm Jackets” by Holger Elfes, December 9, 2009

Adidas has long been one of the world’s premier brands in fashion sport shoes. Now the German sporting-goods company plans to begin selling high-end mountaineering jackets next year, muscling in on North Face’s turf as outdoor gear grows faster than traditional sporting goods.

Sales of outdoor gear will rise about 0.7% in Europe this year, outperforming the declining sporting-goods market, according to industry body European Outdoor Group.

In Europe, Adidas increased its spending on marketing this year by running TV commercials with Alexander and Thomas Huber, brothers who are known for extreme Alpine climbing. The sporting-goods maker also started sponsoring Reinhold Messner, who made the first solo ascent of Mount Everest without bottled oxygen.

Adidas Chief Executive Herbert Hainer has said his company would build its outdoor-sports division using its own brand name and without resorting to acquisitions.

“Adidas is doing a seriously good job as the company tries to take advantage of the increasing interest for outdoor gear,” says Mark Held, secretary general of European Outdoor Group. He expects the industry’s growth to continue into next year. “Even in hard times, people continue buying outdoor gear to escape for a while from the seriousness of life.”

Edit by JMZ

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Full Article:
http://www.businessweek.com/innovate/content/dec2009/id2009129_588770.htm?campaign_id=innovation_related

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